Unchained - Crypto Has Seen Drama Over ENS, BonkDAO and VVV. What Does DeFi's Future Look Like?

Episode Date: July 15, 2026

Nick Almond and Proph3t on ENS's treasury fight, the BonkDAO heist, and why Proph3t would not touch Venice's VVV token. ======================================================== Thank you to our sponsor! ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Cape⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠: Your biggest crypto vulnerability isn't your wallet, it's your phone number. Cape is America's privacy-first mobile carrier that rotates your SIM identity daily and blocks SIM swaps before they happen. Get 33% off your first six months at cape.co/unchained (use code: UNCHAINED). ======================================================== Nick Johnson, the founder of ENS Labs, used his own tokens to kill a vote renewing ENS DAO's Security Council, potentially clearing the way for a foundation to take over a treasury worth more than $100 million. Nick Almond, head of governance at the Jito Foundation, and Proph3t, cofounder of MetaDAO, join Laura Shin to untangle what that move reveals about who should control a DAO's money, and whether voting was ever the right way to decide it. They trace ENS cofounder Jeff Lau's warning that the treasury became a honeypot with zero accountability, and the collapsing voter turnout that let a 3% token stake decide the DAO's fate. Proph3t makes the case for MetaDAO's decision markets over voting entirely, while Nick argues curated delegates solve the same capture problem without giving up the vote. They also cover the $20 million BonkDAO heist, pulled off with one proposal and seven votes, and the backlash over Dragonfly's investment in Venice's VVV token. Both guests agree DAOs are near a bottom. What comes next depends on whether anyone tries something new. Host: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Laura Shin⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, Host / Unchained Guests: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Nick Almond - Head of Governance at the Jito Foundation ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Proph3t - Co-founder of MetaDAO Timestamps 🏛️ 01:06 Laura frames the DAO reckoning: disbandments, low turnout, and the Venice fight 📉 08:26 How ENS DAO's collapsing voter turnout let a 3% stake decide its fate ⚖️ 12:55 Proph3t on why voting is a cost, and how a 51% attack captures a DAO 🏦 19:11 Nick maps DAOs' next phase: substructures picked for expertise, not popularity 🍯 24:09 Why Jeff Lau called ENS's treasury plan a honeypot with zero accountability 📣 28:50 Cape: Get 33% off six months of privacy first mobile service at https://cape.co/unchained 🏗️ 29:49 Why founders like Nick Johnson get vilified for wanting DAOs to run efficiently 🗳️ 36:35 Why Nick Johnson's silent vote against ENS's Security Council reads as an attack 💰 41:34 How BonkDAO lost $20 million to one proposal backed by just seven votes 🧩 46:22 Why Proph3t would not buy Venice's VVV token despite defending its disclosures 🔮 56:45 Proph3t on MetaDAO's origin story: pro oversight, not pro governance Learn more about your ad choices. Visit megaphone.fm/adchoices

It is to me a little bit crazy to just be like, I mean, he is the founder. So I think, like, respect to him and he has built this. So it's not like it's completely not a good idea, but it is just a little bit crazy that you just like throw all this money with no accountability over what is supposed to be a decentralized protocol, like with no fiduciary duty. Hi, everyone. Welcome to Unchained, your no hype resource for all things crypto. I'm your host, Laura Shin.

Thanks for joining this live stream. Before we dive into today's discussion, we're going to take Take a quick word to hear from the sponsors who may be... This episode is brought to you by Cape, America's Privacy First Mobile Carrier. Same premium service you'd expect from any other carrier, but designed so your number, your location, and your data actually stay yours. Get 33% off six months at cape.co slash unchained. Today's topic is Dow's and their issues and where they go from here. Here to discuss are Nick Allman, head of governance at the CETO Foundation and Profit,

co-founder of Meta-Dow. Welcome, Nick and Profit. Hi, Laura. Good to be on. Thanks for everyone. Yeah. Nice to have you both. So the last couple of years, the Dow space has been changing a lot.

We saw last year that a few Dow's paused or even disbanded. In the last month, there's been a lot of different Dow controversies. And on a related note, we're also seeing this debate about tokens versus equity that was sparked by dragonfly investing in Venice. So I wanted to talk about a number of these incidents in depth amidst this backdrop of this moment where it feels like due to the fact that crypto is in an adoption phase, we're going to maybe be on this centralization trend for a little while. At least this is just my theory. And I kind of see that maybe in the future, like once the technology is more adopted, then we will see decentralization.

kind of swing, you know, things swing back to the decentralized end of things. But in order to kind of unpack all these trends, let's just start with one of the bigger controversies that happen, which is the one with the Ethereum name system or ENS Dow. You know, I feel like this one really highlights a lot of the themes. So, Nick, do you want to just give us a recap of what happened there that created such a firestorm on social media and continues to? Yeah, I mean, it's still kind of unconscionable.

going, I guess. But, yeah, so, E&S Dow is the kind of latest of the Dow dramas, I would say. It's been brewing for quite a while. I think it was a Tao that has started to show some of the classic failings of DAO's over the years. They kind of hit a level of, I would say, late stage Dow, mature Dow, when quite a few people had sort of like become part of the scenery, if you like, of the Tao of the time. it sort of progressed into a sort of network of working groups.

There was a grant system. Quite a lot of money was leaving the Treasury to fund various satellite companies that are formed to be active service providers on the Dow. And people were starting to get a little bit upset about a variety of typical Dow dramas, I would say, got quite political. There was questions around the efficacy of the space. and all that sort of stuff. And it kind of came to a head over the last few, over the last month or so, effectively the founder utilised their own tokens to effectively intervene in a security council

that was looking to stop them transferring the treasury to the foundation. So the kind of foundation has decided to come in, take over the treasury, assume responsibility, take it away from the Dow. and the founder Nick has effectively utilized his own tokens to achieve it. That's kind of where we're at the moment. Yeah. So I think it was the COO of the Labs entity, Catherine Wu, made a proposal that the management of the treasury be handled by a foundation. And they, you know, they cited like all kinds of reasons for the proposal, which, you know,

I think a number of them are legitimate. But then what ended up happening was I think there was at the same time a proposal to renew a Security Council whose main function is to veto any bad governance proposals that make it through to basically protect the Dow. And what happened was that Nick Johnson, you know, as you mentioned, the co-founder of EnS Labs, he used his tokens to block that renewal. And, you know, another kind of like interesting tidbit is that in the snapshot, he didn't vote. And so when he did an executable vote, it sort of like came out of nowhere because then it didn't match, you know, how the snapshot looked.

So, yeah, this definitely caused like a lot of, you know, Sturman Drong, I guess we would call it. you know, because initially they were actually, I think, supposed to be separate, you know, the vote about the Treasury and then the vote about the Security Council. But then they sort of became conflated into one thing, which is, you know, is he trying to control the Dow? You know, on the flip side, what I would say is, obviously, he's probably put more working on this thing than anybody else. So, you know, he was on uneasy money, one of our other shows. And that's also what they were talking about. But actually, so before we dive. into some of the other details on this.

I just want to ask Profit, like, do you have any other, you know, what kind of details about that that you want to highlight or, like, an analysis about what happened there that you want to share? I mean, I think it is probably irrelevant to bring up how much the ENS, like ENS labs has actually developed e-spending to develop E-NS, which I believe is on the order of more than a million dollars a month, right, Nick? Yeah, something like that, 20 million over a couple of years.

Yeah, which, yeah, I mean, I'm a founder. I run a business. I feel like that is quite high. I don't know all the intricacies of ENS, but like if I were an investor and ENS is a private company, that would be a red flag for sure. Because you just feel like the amount of resources necessary to do the work that they're doing, it wouldn't cost that much.

And so you're saying like maybe the salaries or something are inflated. Is that what you think? That would be my guess. Yeah. Okay, okay. Yeah, that's also, so I actually don't know how large that entity is. Do either of you have a sense? I think the burn was quite high. I think this kind of grammar has shaken out some of the question of effective spend in the Dow, which is the kind of number one thing that tends to happen in the kind of late stage Dow drama as people start to lament the, like how well the money has been spent. And on the lab side, who are effectively looking to assume, of the Treasury, there has been a lot of spend with very limited output, I would say. There was going to be a V2, E&S protocol.

I believe there was a short-lived idea of doing a ENSL2. And these can haven't been shipped, I would say. There have been a number of different products that were shipped by the various working groups and what have you. But I think it's fair to say on kind of both sides of the spend, the treasury has not necessarily being, you know, capital converted into a positive protocol outcomes for the last few years on either side of the story, if you like. Yeah, and just to give more color on the L2, which was supposed to be called name chain, they did work on it for two years, I think, and then they ended up abandoning it when, you know,

Ethereum kind of also changed its strategy. But, you know, like, yeah, it's one of those things where it's just kind of like to, like, would it really have needed its own chain anyway, you know, just for, you know, anyway. So we can, I think those are like separate questions from the Dow issue. But one other thing that I noticed they cited in their proposal about like why they wanted to give this foundation more control over the. Treasury is they talked about the low voter turnout, which, you know, I think is it's not only E&S Dow, but, you know, I saw some of the stats about it. And yeah, it definitely like the voter turnout was, you know, just on a long, slow, sad decline. And in a way, that's actually how

Nick's tokens ended up being half the vote on the Security Council. You know, he, I guess he has 3% of all E&S tokens, but because there was almost no participation, that's how his vote became so consequential. But, you know, I would be curious to hear you guys talk a little bit about what you think are the best ways to resolve issues of voter turnout or if you feel like there are issues particular in E&S style, like that were, explain why they had such low for voter turnout.

Yeah, so, yeah, voter apathy is one of the, sort of classic Dow problems. Largely, I think there's limited reason. Like most, the average token holder doesn't really want to spend their time governing a protocol. And so it tends to coalesce around a sort of, let's say, cohort of Dow interested people from across the industry. There's a kind of cluster of, you know, professional delegates and people who are very interested in Dow governance over in the kind of BBM world that largely kind of coalesced around almost every Dow. And so you kind of get this shared culture that emerges,

mainly because there isn't a broad participation from the wider token community. So it leads to this kind of slow capture around the very most interested people, the people who are willing to spend hours and hours on governance forums and things like that. it's difficult it's the finding mechanisms for trying to get token holders to turn up to dows and vote um i would say the the biggest example of this was jupiter dow on salana uh jup dow which was very very retail heavy and consequently even more chaotic you go completely the other way the d gens all turn up and vote and stake their tokens to get voting power uh and it was pure chaos and and they wound down out of it for they had high vote vote turnout and that

That wasn't great either. So I think until you get into things like decision markets, which profit will talk about, I think the best case scenario is that you have a highly curated set of delegates. So over at Gito Dow, we have a kind of curated set of delegates who are representatives of the kind of wider Salonor ecosystem. And they're not necessarily people who are trying to come in as professional delegates, you know, get paid for being delegates and expect some be able to draw down the treasury for some of their services. And instead, we've just got a lot of kind of salana aligned people who help us make good decisions. And so the kind of curation around who the delegates are is one of the best ways to do that.

The token holders can still turn up and overrule the delegates if they want, but there's no real need to if everything's going well, I would say. And how are those delegates appointed? So the foundation curated. So our kind of journey. was we tried to do the irdrop distribution that is typical, but the kind of Solana community

was so alien to Dow's, like there was no Dow's that existed, then none of them turned up to vote. So we kind of had to emergently define, discover a set of delegates and sort of assign tokens to them to be

part of the delegate set, which made a huge difference in the kind of quality of the decision making. So rather than it be kind of like pseudo randomly distributed power to a Dow, which is how most of the EVM DAOs did it, power randomly distributed on AirDrop Day. We have a kind of more aligned set of participants who are helping govern our Dow. It works much better. Okay. Profit, do you have anything to add? Yeah. I mean, obviously, Medidau has a pretty opinionated take on this, which is that voting doesn't really work and that you need an alternative and we use decision markets.

I mean, I guess to break apart the problem, voter turnout is not intrinsically an issue, right? The main thing that we want from a governance system is making good decisions. And people showing up is actually a cost, right? Like, ideally, like the best scenario is we make all the right decisions and just one person shows up and has to spend like the least amount of effort making that decision. And the problem, like why we want voter turnout in a voter-based system is because, as Nick alluded to, like, you can get Capture otherwise, right? If I have 1% of the supply of a token, it can be in my interest to do, well, like, Capture maybe is best illustrated by, like, the 51% attack, right?

If I have 51% of a token supply, I may benefit from voting myself, like, the whole Treasury. even if it's not in the interest of the Dow, because, like, yeah, if I say it's like a $10 million treasury, and then I have 51%, so like $5 million worth of tokens, even if I completely nuked the Dow, like I would benefit $10 million by voting the whole treasury to myself. And then you can think of this, like, in the extreme, where, yeah, there's only like 1% of the token supply voting,

and they, like, have captured this Dow. And so, yeah, I mean, what we use instead is markets to make decisions. So instead of people voting, they trade on essentially what would be good for the value of the token, which I think is quite nice because it means that you actually have like a direct incentive to participate, which is that you can make money, the same incentive to participate in any market. And that's, yeah, if the market is wrong, like if other people are wrong, that you can, yeah, make. money by training against them. And so that is kind of like our opinion to take on this. Yeah, that's super interesting. I love that. And I could see how like, you know, when I was writing the script for this episode, I was thinking, oh, this sort of reminds me of how like paying too much attention to like what's going on in the government can be boring. Whereas something that's

more like, yeah, similar to betting is more like a game. It's more fun, you know, I think that's why like prediction markets feel more fun than just someone kind of pontificating on like what they think is going to happen, you know, which is, or what should happen, which feels more like a truly political or governmental thing, you know, it's like the same thing. It's just the spin makes it such that one feels like C-SPAN and the other feels like a video game or something. So anyway, so I did want to also ask about one of the proposal I saw, which is Alex Vandesand, who was also one of the co-founders of ENS,

made a proposal where the Dow can delegate five million of its tokens to new delegates. And there was kind of some complex stuff about how there would be like certain metrics and like people could decide which metrics they thought were important. And that basically like once those end up being delegated, then that would mean that 60% of the Dow vote would be, you know, by these people. And thus they would be large enough to block the largest stakeholders. And, you know, Nick Johnson himself said he liked that idea as long as the foundation could still run the day-to-day treasury. But I wondered what you thought of something similar to that. Yeah, I thought it was a good idea, actually.

I think the Dow has a lot of tokens that it could utilize, but to distribute the power base of the Dow effectively. So you can think of the governance tokens as like the tokenized responsibility or the tokenized power of the Dow. And this was, you know, to address this idea that there's a single holder with three million tokens, let's get five million tokens, distribute them to a broader set of people to rebalance the power structure in the Dow, so it's not so founder-heavy.

Good idea, but where those tokens go to, if you kind of randomly distribute them again, you're going to end up back at the same problems. So I think this is a fair way to do it. The question is, can they do it now? Because I'm pretty sure the Dow has effectively been assumed, the control has been assumed by under the kind of new security council structure.

So you've kind of had this hard, power battle over who actually controls the protocol and it comes down to the security council which is effectively the old ones just being disbanded and a new one's being set up with a new token vote and kind of nick is on there so um whether such a proposal like this redistribution of power is possible anymore is a bit of a question i would say like i'm still bullish on voting by the way so profit here is very anti-voting i would say so i think it's still possible but one of the things that makes a good voting system work is effective distribution, right? So who, how is the power being distributed? It makes sense to have, like voting is still a great way to canvas opinion at a huge

scale and I have a nuanced answer. So distribution is one of the most important elements of that. And I think we pick up a lot of bad governance based on bad token distributions. So I think there is better ways to structure governance dynamics. And we just have an inner. on this. So we're kind of largely stuck in like 2016 Dow governance patterns. It's one of the reasons why I think MetaDow is interesting because it's actually a fresh take on it. But largely the industry has kind of structured very heavily on some very old Dow technology effectively. And I think we pick up the issues with the voting because of that. Yeah. One thing I did want to ask about voting structures is I was thinking about how, you know, in the U.S. or it could be the U.K., but, you know,

we have like this representative democracy where, you know, and this is kind of like the concept of a delegate, but I think it could be something that's even a little bit more structured, you know, because in the U.S., we have the executive branch, we have the judicial branch. We have the legislative branch, right? And so it could be something like what Alex had proposed where, you know, these different groups are, it become delixtial. delegates, yeah, for some period. But, yeah,

I guess the way you were doing it, you guys are literally appointing, but it could also be that they are voted in, although then there's the issue of the voter apathy. So, but, you know, does it feel like that is, at least for the Dow's that are governed more in this

truly governmental sort of way that they're moving toward this structure where there's like multiple types of governmental entities and, you know, the different actors in them can be elected in, so to speak. Yeah, I'll speak to that because this is largely where I see a lot of it going, effectively specialized substructures. The problem is the average token holder does not really have the context or necessarily the knowledge to make effective decisions on a kind of frontier

protocol, if you like. So it makes sense that you'd want to shape the voting power towards expertise. So I do think one of the kind of more advanced structures we'll get to over the next few years is that we have effectively specialized substructures. We're doing bits of this at Gito Dow at the moment. We haven't got to the point where we elect these individuals, the kind of, you know, we're still hand-selecting these things. Those kind of create these kind of weird loops where if you're frail to capture and decentralized systems are, then the people will, you know, stack the kind of vote and be the very, dedicated people who come in and just want to get paid to sit on councils will be the ones who are there for the vote. So I think it still makes sense for there to be, utilize the tokens and distribute them or distribute subsets of the treasury to groups who are effective and hold them

accountable. So the problem is, is when these substructures just end up there forever. So they should like effectively self-destruct. You know, we're doing this to set up this very defined thing. you have a mandate to spend this treasury over six months, one year, and then it all disappear and it automatically dispends. And I think that's likely to be, if we can get better structures which have this subsidiarity in DAWS, I think that'll be hugely beneficial. The other thing I'll sort of flag is that Solana governance has just upgraded

and has a interesting delegation structure by the validators. So that has we've just introduced this protocol level program which allows validators to vote on network proposals, but delegates can override their vote individually. So if they want to come and vote differently to their delegate, the token holder can come and overrule those delegates, which I think is a it's a kind of delegation with revocation, which I think is a really useful structure. Okay. And prophet, I wanted to ask you, like, do you see any merit in that, you know, idea of having kind of like these expert governance people? Or are you just kind of down on on the concept of governing a Dow altogether? I mean, yeah, I think delegation is probably better than the status quo of just like, or at least it seems like an ESS case of, having basically no one participate or like the people participate not being that knowledgeable

so yeah I mean delegation seems better I mean I guess like I live in the U.S. The U.S. is basically like a delegation based out we have Congress and yes and it's like it is maybe not terrible like I think governments are probably not the most effective

things in the world, but at least maybe the fact that they don't change is useful in the context of a government and probably useful in the context of something like ENS, where it's supposed to be this hyperstructure that's not really changing that much. So yeah. Okay. So last question I wanted to discuss on this. So Nick and Catherine said multiple times that they felt that having a foundation managed a treasury and the ENS token holdings and the endowment would be better than the Dow doing it because it just felt inefficient and, you know, trying to make different financial decisions, like sort of day-to-day, was challenging. And then Jeff Lau, who has been at E&S for nine years, said that sending the Treasury to the

governor contract was idealism that created a honeypot with zero accountability. And I wondered what you thought of this notion that protocols should, sorry, that Dow should govern protocols, but not money. Yeah, I think there's, I think there's a bit of both sides on this, which is kind of true. I think if you stick a permissionless pot of money on chain, and some of these have been billions of dollars in size, it's going to attract people who are there to effectively extract the treasury, and it is a kind of large honeypot. So, yeah, the governor contracts was the fault here. It wasn't a sophisticated enough mechanism to be able to deal.

we kind of asked too much of DAWS. So he is like going from, we've not really tried DAWS before to putting a billion dollars into these governor contracts, which was meant to govern a defy protocol in sort of 2019. It was generally a bad idea.

I think that's kind of true. I, however, do think it's something that we need to like get to properly. I think the on-chain treasury management is what gives accountability to the token holders. So a lot of what DAO's reform for was kind of in the wake of the ICO boom where people raised loads of money and then just

ran off with it. At this point, you would be trusting the foundation not to just everyone retire, right? So once it's off-chain or once it's under the scope of control of the foundation, it's a lot of money. It's over $100 million. We now have to trust the E&S future is dependent on the foundation, not just retiring, right? You know, so the fact that it's in a treasury means that you know it's there, you know it's accessible. We should just get better at being able to broker access to it through more advanced governance structures. So one of the kind of disappointing bits, I think, for E&S, this was a kind of darling project of Ethereum. It was one of the kind of tent pole Dow's that was still holding the dream alive. And then the fact that they kind of give up and just

moved it into self-controlled treasury is really kind of upset the Ethereum people. For good reason, I think. They could have advanced the Dow. And in fact, they did quite a bit of work on tearing down doing a retro on what worked, what didn't. They create a kind of roadmap for improving it. And then they just kind of like, let's not bother. Let's just centralize it around the foundation, which is a bit of a shame, I think. Profit, what do you think? Yeah, I mean, I obviously I'm working on something new.

And so I'm not totally opposed to new structures. At the same time, like the way that companies work and securities evolved, was pretty linear in response to problems. And there's a clear reason why we have things like fiduciary duty for a company and also some level of control, which is that like Ralph Merkel, actually, the inventor of Merkel trees,

he put it in this great paper where he says like, okay, so ideally we would just have experts make all the decisions, but the problem is that we don't trust that the experts are going to make decisions for all of our interest and not for just their own interests.

Because, yeah, and so we need like this accountability mechanism and that's historically been voting. And yeah, I mean, the NS treasury is quite big. It is, to me, a little bit crazy to just be like, I mean, he is the founder. So I think, like, respect to him and he has built this. So it's not like it's completely not a good idea, but it is just a little bit crazy

that you just throw all this money with no accountability over what is supposed to be a decentralized protocol. And, yeah, like with no fiduciary duty. All right. So in a moment we're going to talk more about the tensions and complications with centralized entities and decentralized protocols. But first, we're going to take a quick word from the sponsors to make the show possible.

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Go to cape.co slash unchained and use code unchained for 33% off your first six months. Back to my conversation with Nick and Profit. So Nick Johnson came on our other show. uneasy money. And the group was talking a lot about how they felt like frequently a founder like Nick will put in most of the work on a decentralized protocol, but then be like vilified for wanting them to be more efficient or, you know, wanting to change them in a way that's more centralized. And, you know, we, we definitely saw something also similar with AVE this past year or past half year. You know, amidst all this I saw also E&S down also sunset. It's public goods working group,

which again is a move towards centralization, it feels like. So this is, you know, amidst just kind of this whole trend where it feels like after Trump got elected, everyone's like, we can be centralized now. So I, you know, wondered if you had thoughts about like what is kind of a good or clear way to divide labor between a Dow any centralized entities like labs and, you know, when it's even appropriate for somebody to do a move similar to a cross protocol where they went fully private. So I'd love to hear your thoughts on all that. Yeah, I think it's, it depends what you're trying to build.

If you're trying to build a decentralized system that you're hoping people to use almost indefinitely, right? So if you take E&S as an example, you could build that very deeply into a product that you're building. right so you could use ens identities as a way to as a very central component of your own product now if that product changes if that decentralized system changes you know without you being able to have any influence or foresight on that happening then it kind of bricks your own product you the point of a lot of these things is to be able to build long-term assurances that a it's going to exist it's just going to be there so these treasuries were designed to like ensure almost indefinite operation, right? And they were there to build assurances that, you know, the founder's not just going to go insane and pivot and change everything around it. So these protocols are intended to be integrated into lots of other protocols.

And ENS is one of these things. So in that case, I think that's the most credible argument for a decentralized governance structure around these things. That and you kind of want to know if you're investing in a token, if you're buying something long term, increasingly, you know, tokens are starting to pick up value accrual modes of action. We've just done this at Gito. We're very committed to ensuring that the Dow collects all the revenue,

and then the Dow is then responsible for connecting that to the token. If you're trying to build a kind of thesis around that asset, if it can change at the drop of a hat, then you can't really do it. Right. So one of the nice things about decentralized governance mechanisms is that you can see the change is coming. And then you can respond in the market to it. So if everything's centralized around a founder and at their whim, then you can't build long-term value thesis out of these things. You can't build these things into your products and have assurances that they don't change. If you're trying to build a system that's like that, then you need something like decentralized governance to effectively decentralize the risk for other people who are using it. I think there are some things that are much more centralized, make more sense, should be more founder-led. So I think it's about, I think a lot of the time we pick decentralized governance as a kind of reg-arb rather than a we wanted to decentralize the protocol.

So I think there was a lot of people who have set these things up without the intention to be decentralized and did it for merely getting a token to market, if you like. Yeah, I also, I mean, yeah, obviously there's a lot of things. that the founder or like the operational team should be deciding. Like I don't think everything should be going to governance. Maybe at some point we can get governance tech to a place where it's like actually that good at making decisions. But that time is not now. And so yeah, we have a pretty clear view, which is just like huge, huge decisions.

So like say you're minting new tokens or you're like issuing new tokens from the treasury, that seems worth going to a proposal. And then really large spends. I mean, I do ultimately believe that, like, investors should have some oversight over the money event because otherwise we get rugs, which is like the story of most crypto projects by number and probably by well.

And, yeah. So essentially, it almost feels like anything where it's going to affect the tokenomics should be controlled by the Dow, because they're the Dow token holders. But then for what Nick and Catherine or ENS Labs is proposing, where day-to-day financial decisions are more centralized like that, that would be something that's like okay or like within, you know, certain limits? I think it makes sense for the entities associated with the, with a protocol to all have some degree of financing that's sustainable that allows them to have, you know, to be able to govern capital themselves,

you know, a lot of the kind of more extreme ends of the DAOs where, you know, people are asking the Dell for short, small amounts of money over again, sort of voting on post-it notes sort of end game, was all a disaster, right? So what you want is the people who are capable of building the protocol, the people that are kind of high agents in the system, the kind of hyperagents in the system, they need the money and the capital to be able to activate that. I think largely most grant systems have been mostly a disaster.

So it makes sense for them to be like foundation mediated a lot of the time, I think. So I do think there's some degree of treasury management. I think there's also a need to have a treasury that is on chain that gives the token holders assurances. And I do think it is like certainly economic governance rights and things like that need to go through a down. But I don't think it's necessarily as clear cut as like everything should be as on chain or everything should be in a foundation. I think what you'd want is the agents in the system building the things to all be capitalized enough to to kind of achieve the goals that everyone's looking for. Okay.

So I did also want to refer back to a comment that I made earlier about how Nick didn't vote in a snapshot about the Security Council renewal. And then, of course, his vote is what killed that renewal. And it sort of felt like, you know, it was meant to be a surprise move because if he had signal that he intended to vote against it, then it would have probably generated some amount of opposition that would have made it hard for him to actually kill it. And so it sort of feels like in a way, it could be viewed as a governance attack. Like if it were an anonymous whale that had done that, like for sure, I think, you know, people were already upset enough that it was Nick himself.

But if it had been, yeah, some anonymous voter who had done that, then it definitely would have been viewed much more suspiciously. But I was curious, like, do you have certain kind of rules that you feel that founders or best practices for founders to follow when engaging with DAO's? Yeah, interesting question. I think when it comes down to it, it ends up at the hard powers, right? So a snapshot is a signaling mechanism, and then the actual on-chain execution, Dow is the kind of real one.

And so I think there's certainly a bit of game theoretic thinking here. Let's like have the signal. The signal doesn't says I'm not turning up, but then I turn off and that brought me a bit more time to avoid a kind of coordination event where people can come and out vote me. I think that was absolutely intentional and it was done as a effectively, yeah,

it's as a capture attempt, if you like. But, you know, you can get into the argument over can you capture your own project and all that sort of stuff around, certainly if it was someone different. Similar things happened in Arvei. You know, the token holder vote for that was done over, I think it was over, Thanksgiving and it was intentionally done as a short vote over a time when people

wouldn't coordinate things like that so these kind of votes do happen it's not exactly good practice if you like the good practice is more effectively it's like what are the rules that you can all expect from this thing so we all operate under the shared rules and we can stick to them ideally these things would be on-chain mediated mechanisms but you can effectively what are the rules of the game and everyone sort of agrees to follow them and we do follow them and effectively that ends up trustless

is the kind of game so yeah the practices are yet to be fully forged I would say we've seen all the worst practices I would say for sure but what the good practices of governance are still being forged I would say and I've always been surprised that there's not as much as experimentation

as I would have hoped on that like every pretty much every everyone uses this compound governor structure that was invented in like 2020 2020 2021 uh and i think it would be cool to see for example have it so that like every month there can only be one proposal a month and it's just like whoever gets the highest stake from the tokens that's the proposal goes live and it goes live at the same time every month so that everyone can like be aware like okay this is when i should be participating in active um and And yeah, I'm not exactly sure why it's been the case, but it feels like everyone has kind of done like just followed the same exact thing. Like, and not really innovated that much.

I'm like, oh, well, this doesn't work. Which makes me think that maybe they didn't want it to work in the first place. And to be fair, like, these are all people running their own businesses separately, like their own defy businesses. And so I think you can very reasonably take the take that they shouldn't be spending their time. on governance. But at the same time, like, crypto is still very new. Like, we, it's not a guaranteed that it's going to work. Like, defy it's not going to work. Or it's not guaranteed that defy is going to work. And so it probably would serve us to, like, improve our, our core mechanisms and make it work. Yeah. It basically feels like there's, you know, this tension where

centralized entities they you know like like any business there's a lot of things they would like to do in private and then when they're ready to make them public they'll make them public um but you know dows should be like fully transparent and so when you have these two entities that are trying to work on something at the same time and their mo's you know for lack of a better word just are meant to be different like there's going to be clashes around around that So we're going to switch to the bonged-dow thing. And I also, I know we're running out of time, but I also want to cover VV.V. So we'll just cover Bunkdow super quickly because this is something that's so obviously just plain stupid, frankly, which is that on July 6th, then attacker drained $20 million from Bokdow's treasury by submitting a proposal that, like, you know, was all flowery, promised to rebuild the Dow, et cetera, et cetera, but also included an instruction to send. the proposer, 4.4 trillion bonk. And this, you know, person only had to spend $822 billion, or billion bonk worth about $4.4 million just to reach quorum. So they did that. There were only

seven votes or seven wallets that voted out of 18,000 possible. And there was no time lock on proposal. So once it was voted in, it executed immediately. And I, I mean, this is just so fascinating because I also saw the Bonk, Inu X Handel said that law enforcement had been, you know, had been called about this. But I just don't even know, like, is this even illegal? Like, I just wonder, we saw that a judge after Avi Eisenberg manipulated markets to steal from mango markets, that a judge ruled that you can't defraud a smart contract. So I don't even know. But I guess, so the two questions are, you know, just, what do you think like went wrong there and what should what what should be kind of the bare minimum

that doubt should do to prevent that kind of stupid situation but also like is that illegal like I just yeah so two-part question I mean I feel like yeah uh Nick and I may disagree over whether like voting is the best system or not but this is actually like not even a voting issue like we admitted out we have a telegram bot and a slack bot that notifies us whenever a proposal goes live. That system should have existed. And that would have solved this problem. Like, I think the issue was literally they just were not aware that the proposal was live. Like, the core team was not. And if they were, it would have failed because they had enough tokens. So, yeah, it's good to create like

on-chain notification systems, I guess, was my takeaway. Yeah, I agree with that. I think that's, I mean, this is why you have people like myself. who look at the Dow once a week, at least, right? It was literally, it's an apathy attack. This has been done a couple of times. Very similar one happened with compound a couple of years ago, someone called Humpy turned up. And that was largely because they knew that the Dow was largely governed by,

like, blockchain clubs in universities. And they did it when they were all on holiday. And they managed to get bought their tokens, knowing that the blockchain clubs weren't, around to defend it. Similar thing, it was literally, you know, an attacker has seen the no one's looking at this thing. It's largely been abandoned. All I needed to do is get, you know, buy these tokens and put it through. It kind of high risk play, really, because they're, like, they were betting on simply no one just looking at it. And it did have a time lock, actually. It did have a one

day time lock. So that, but it's just that it did. It was only one day, whereas two is a bit, a bit, a bit more advisable. But who knows how long it could have happened before someone noticed, you know, if it went unnoticed for a whole week, could it have gone two or three? Like, does any time lock matter under those contexts? I'm not sure. But yeah, as to whether it's illegal or not, I mean, who knows, right? Because this was effectively a, it followed all the governance rules.

You know, someone came in, the vote was up for five days. It did one day time lock. They proposed a new governance paradigm. for bank, they're probably not going to do it. That's going to run off with the money. But, you know, in theory, if someone tries to set up a new kind of, and it was actually kind of futarky approach to doing the Dow or whatever, you know, it's possible.

Whoever's taking it over might have a new regime for the Dow that they want to put into practice and they might do something with that money that, you know, but effectively they have taken and captured the Dow. Is it illegal? I'm not sure. It followed the rules. Yeah, yeah, I understand that question is probably above both your pay grade. But yeah, when I saw that tweet, I was like, okay, who are you contacting?

What law? Not that I think it's like legit or, you know, that they did that. I'm just saying, like, I don't know if there's any laws that govern these things anywhere. Okay, let's talk about tokens versus equity because this obviously was a huge thing on the timeline recently. And it's interesting because what sparked it was. dragonflies investment in Venice and also in the VVV token. And I guess people had this misperception that VV represented, you know, like it was sort of like a governance token. Like it represented some kind of ownership in some sort of like network. But it's not. It's about, you know,

when you have enough of it and I think it's like you stake it and then you're able to get this DM, which is another token that you can use for compute, which, yeah, that, you know, we're all seeing the AI revolution take off and, you know, on some of the other podcasts on this network like bits and bibs in particular, people have been talking about how they feel like tokenized compute is that's going to be a thing. So Eric Voorhees, as ever, is very early on, you know, pretty much all the trends. You know, he's very successful founder in crypto. Talk to me a little bit about like where you think. Because, by the way, you know, this controversy about tokens.

versus equity is it's not new to VVV in Venice. Obviously, this has been going on for a long time in crypto. I think that's why it caused so much anger initially because this is just sort of like a sore spot. But talk to me about like where you think that debate is going and how you think centralized companies in crypto are using tokens to, you know, in other ways that don't kind of like cause that debate or what you expect we might see more of in the future. Yeah, I think The Venice kind of debate was very interesting because I thought, like, I'm kind of mechanism design nerd. And, you know, we kind of got it. Crypto was all about mechanism design in 2018, then turned into Regarb around somewhere like 2021-22.

So we kind of abandoned this idea of utility tokens and that we might be able to build, like, token mechanisms that had viable token economies that were completely kind of non-fayette form, decentralized systems that had, you know, a credible valuation framework to them. So I was quite surprised about the kind of token equity debate going so big with Venice because I would say this is one of the only utility tokens or only viable tokens that we've seen in the last few years. So I was kind of surprised that people just had somehow got considered it like just basic equity in the business. But it is a viable utility token.

And in fact, their mechanism, they effectively said, selling compute perpetuities. So you stake these tokens to buy a perpetual access to $1 of computer day. So it's a really interesting product actually as a little financial instrument. There is a centralized company that you have to trust to continue to service that compute over time. But the token did go up something like 8x in the bear market. And I think a lot, it's a question on how much of that was the actual demand for the token for the compute. But there was certainly, you know,

the majority of token holder of a stake these tokens, it reduces the float of the supply, and people are utilizing these DM tokens to actually get access to compute. So I think it's a viable system, and I would love to see more of these utility-like systems sitting alongside centralized companies.

But you need to find out where the actual commitment is. Like people had bought this token thinking they were getting something more to do with claims on a centralized business rather than a utility token. And I think Venice has the choice of being able to say this is a token-centric project or not. And at the moment, it's still completely up for grabs

as to how they spend that money, if you like, are they going to spend that money on making the token economy better? Or are they going to spend it on kind of like enterprise, you know, inference business that has nothing to do with the economy? So I think the question around whether it's equity or token centric is just open. I think that's the problem that they have.

Yeah. I mean, what I would say about this is like, I do think the backlash was a little, was definitely overstated. I mean, they actually were very clear in their communications from the start of what VV was and what DM was. And then it was not equity by any means. and some people, of course, bought it an expectation of it being more like an equity instrument, but they communicated that fairly clearly.

And it wasn't like, I mean, we've had plenty of instances in crypto where teams actually rug the investors are like they say one thing and then they do another thing. That's not what happened here. And it's probably, I mean, I think people maybe just felt some PTSD from the other

times where they actually got rugged. And so that was like the knee-jerk reaction. at the same time and like I think props to Venice for trying something new I think the only thing I would have would probably been good for them to do is to call it like Venice compute token or Venice utility token or something just to make it clear uh but of course yeah like I don't know if that's really their responsibility to make sure that like everyone reads their docs or doesn't at least as Hasif said, could consult an LLM before buying a financial asset. At the same time, I mean, I think it generally, like, it seems like they will try this experiment.

I'm not super bullish on that asset class of utility tokens for a few reasons. I mean, one is like it kind of sucks for teams for examples like this. Like now you have these two things that you've got to manage for. Obviously, a lot of your users hold the token. If you violate their expectations or if you do something that hurts the token at the expense of equity, which you may have to do, right, because equity has fiduciary duty, then that could hurt. and you've kind of got these like dual mandates.

So that's one thing. And then I think the other thing is like, uh, it just remains to be seen that utility type tokens can be as valuable as equity tokens like, or like equities. Um, I mean, my takeaway from the whole debate is like, I don't think Venice did anything wrong.

It's just I would not buy the VVVT token anymore. I mean, the investors had just gotten into Venice at a billion dollars, uh, like on the equity. and then the token was trading at 1.4 at the time. Meanwhile, I would expect that if Venice becomes like a valuable business, that most of the value accrues to the equity because they have control

and they have a judicial duty and a financial incentive to have it accrue to the equity. And, yeah, I mean, if you look at, for example, like maybe we can analogize utility tokens like commodities feature and the equities market is about one order of magnitude bigger than the commodities features market in terms of like, I mean, it's kind of hard to compare because you're comparing open interest to market cap, but like around 10 times bigger. And so, yeah, I mean, I think the models where people are trying to ascribe more value to the token and have the token as like the sole instrument at obviously people like founders on Medidow do this, but then Morpho has. like publicly stated morpho is the only token that we care about. There's no equity. We only have this ownerless foundation. Grass recently came out with this as well.

And so, yeah, I think that will probably be the direction that more and more of these projects take as investors reject. Like most of these people who have bought tokens when there was an equity company have like the financial returns on those instruments have not been good. And so, A, people are not showing up as much because they see that. And then B, the people who do you want to participate in that, maybe have less money to allocate. And so, yeah, it seems like the direction of teams trying to treat the token more like equity is like positive and where we're headed. I know we're like a little bit overtime, but do you guys have a few extra minutes?

Yeah. Because we started like, okay, great. Sorry, Nick, do you want to add something on that? Well, profit. So we've just done this at Gito, right? We've just basically done a public confirmation through our Dow to say that we're a token-centric project. And the meaningful asset in across the entire ecosystem is the token. And I think you're going to see more projects make effectively public declarations that, you know, that says this is the case.

I think on the case of Venice, they have an opportunity to demonstrate, actually, that the token is meaningful. and they've now got this balancing act between the two, they have a monetary policy on that token, and it's how much inference that they distribute. So if they double the amount of compute that they put through that economy, they're obviously piling more value into the token. So it's going to be highly evaluatable, if you like, and valuable ultimately as to what the real value of that token is.

That's kind of why these things might be interesting. But yeah, I think essentially the next year is just going to be, it's going to be clear, which assets. is going to accrue the value in which is most important. Yeah, there's something about it where it's, you know, obviously this is not like an exact analogy, but just like a point system of, you know, any company or some kind of reward or whatever.

So, you know, people do like, forget the names of these, but there, you know, there are those companies or people or accounts that will figure out the monetary value of, you know, any kind of airline rewards or, you know, whatever. Okay, let's just talk for a moment about the future of where this is all going. And let's just start with Medidow because obviously, like, you guys are being talked about a lot. And I know you already shared a little bit, but like I would love to hear just, you know, a little bit of the backstory of like, you know, why you went this direction and, you know, what you think is working well or, and what other ideas you have that you'd like to implement. Sure.

So the core idea of metadata is, I mean, there's a few ways to frame it. But one is that this idea of ICOs is actually quite cool. Like this idea of anyone around the world being able to raise money from a distributed set of participants is quite cool for a number of reasons. One, it just like opens up access to capital. But then importantly, what we see on metadata is that a lot of times your early token holders like the people who participate, become early users, right? Like we had a company that raised on MetaDow that 10X their usage.

It's like a crypto credit card product. And they raised from about 10,000 people. And a lot of those people converted into essentially like marketers and users of the product. And yeah, so like this is quite cool. Meanwhile, I think tokens as they existed are losing their trust. There's like a few specific attack factors, I guess. Like we have scenarios where obviously people raise money and then just like disappear with that money.

That is like the base case for an ICO. And then we also have issues for like, yeah, kind of what we're talking about with the token equity split. Like you as a token holder want to know that if the business becomes valuable, that you actually have some stake in that. and then it's not just like siphoned off by some, some labs entity that gets to take all the revenue and just like internally distributes the profit. And so, yeah, we we have this like token structure, this legal structure and treasury structure

to help mitigate some of the risks. And like we're definitely not, we're not pro, we have this saying, which is like we're not pro governance. We're pro oversight. Like we, the goal of this is not to get communities, necessarily like deeply involved in the operations of of these companies. It's mainly to provide a check and to provide trust and confidence in the tokens because that's what like makes them investable and allows people to like align themselves

with with companies in this way. And yeah, I mean, I'd say right now it's going okay. Obviously right now we're in like a tough ICO market. But we're still doing I mean right now we have a really oversubs. I see how they're trying to raise two to four. I actually haven't checked this morning, but when I went to bed, it was like $20 million committed to that. And yeah, we've done about a little more than $40 million raised for entrepreneurs across 13 companies as far. All right. Well, any last thoughts on where you think the future of DAWs is headed, especially just in this moment in time where we're just seeing so many DAWs.

change in different ways? Like, you know, what do you feel like it's next for DAO's? I think any that are left standing that have projects or founders related to them that don't want them, they'll all go the same way. So I think like any remaining uncaptured DAWs will get captured unless the teams and projects behind them are really committed to them. So I think we're kind of seeing the end of like Dow 1.0 era, I hope that we end up back in a kind of more era of experimentation around governance practices and mechanisms in the space. I think ultimately as we move more into kind of economic governance and we start getting to value accrual tokens, and you're not going to be able to do value accrual type work out of a centralized company. So it's going to be

Dow's and things like that that end up doing the kind of on-chain buybacks, value accrual mechanisms, kind of dividend-like, you know, distribution structures where the protocol revenues are shared via tokens and things like that. All of that's going to have to be done by a decentralized entity. So I actually do feel like we've hit close to Dow bottom. I don't want to kind of bottom-call Dow's, but like I feel like I'm starting to see the, I've been watching this stuff for a long time, and I'm starting to see the We've seen all of the failing so viscerally now, the next era of it can start to emerge. And we are starting to see projects like MetaDow innovating on this.

And I hope we see just like new Dow patterns, new Dow contracts coming out in the near future that actually innovate on decentralized governance. So hopeful still. Yeah, I agree. Like I think I don't have like any concrete evidence for this, but like it feels like right now we're at the bottom or close to the down bottom, right? Like it can't the sentiment touch house can't get much worse than this. But and yeah, plausible reasons why we might improve is like I mean, yeah, I think one is just like I don't know actually. It might be tough because a big bull case for Dow's is like this idea that you want to build something that's a valuable asset that doesn't comply necessarily with like securities regulation. And it seems like for the next few years, securities regulation is not going to be heavily enforced.

But yeah, in terms of like I think what we need to do to improve here, it's like I hope that there are other people on the the frontier like Meta Dow that are trying new experiments because it really only takes one of these experiments to work or like several of them to bring forward incremental improvements to like, yeah, make this whole thing work. Like I think a big problem has just been what I talked about earlier where like everyone is trying the same thing. And yeah, we know, we now know like I think we all agree that the way that compound Governor V2 like just that standard way of governance, yeah, It doesn't work, at least for a long time. And so we need, if DAO is it work at all, we need to try something different.

And so, yeah, hopefully more and more, or like we see some experimentation here that can yield valuable results. Okay, great. Well, it has been such a pleasure chatting with you both about DAWS and all these recent incidents, which are really fascinating. Thank you so much for coming on Unchained. Thanks, Lauren. So much for having. And thanks to everyone for joining us. We will catch you all not tomorrow, but on Thursday.

Bye now. Now, thank you hear on Unchained is investment advice. This show is for informational and entertainment purposes only, and my guest and I may hold assets discussed on the show. For more disclosures, visit UnchainedCripto.com.